The rotary valve seals are leaking, this happens after the engine sits for a long time... There is not much you can do about it without a complete rebuild.. Run it a bit and see how it does, sometimes after some use it will get a little better.. You will have some ugly sluge come out the engine for a little while after cleaning it out.. I bought an old ski that had the same problem, it is now running great.. You will probably go through a set of plugs too... Keep an eye on the oil level and you should be ok.. Just run it easy in the begining to get all the crap out of the engine.. Good luck!
